More realistic spending limits and
a three-for-one match for $100
will promote competition and participation

With the Republican President and two major Democratic presidential
candidates rejecting, or thinking of rejecting, public financing
for their primary campaigns, the post-Watergate system of financing
presidential nominations is in grave jeopardy. But after a year of
study, a blue ribbon Campaign Finance Institute Task Force has
concluded that the system should be saved and improved.

The system is failing, the Task Force found, because current
spending limits have become too risky for candidates while public
funding has become less valuable. Moreover, the public funding
account faces insolvency by 2008. “A collapse of the system would
be a real loss for democracy,” the Task Force said, “Competition
will be reduced and the range of viable candidates in each party
will be truncated.” To respond, it proposed revamping the system
for a new political environment while “dramatically improving the
participation and engagement of small donors.” Its innovative
proposals and research are sure to become the subject of debate
among presidential candidates, legislators and the public before,
during and after the 2004 election.

The Task Force included prominent major and minor party veterans of
past presidential campaigns, officials with experience in public
financing issues, scholars, and others with a wealth of knowledge
of politics and campaign finance. (Attached are biographies)

According to CFI Executive Director Michael Malbin, “The findings
and recommendations were based on a wealth of new research.” For
example, Malbin said, “we discovered that there were only 774,000
donors to all candidates combined during the presidential primaries
of 2000. That was less than four-tenths of 1 percent of the voting
age population. The vast majority of those donors – 568,000 of them
– gave $100 or less. But the small donors accounted for less than
20% of the money from individuals, while the one who gave $1000 –
fewer than one in seven of the contributors –supplied more than 60%
of the top candidates’ contributions from individuals. These
findings became the basis for the Task Force’s recommendations.”

The 121-page Task Force report also includes extensive data and
cost-estimates for other approaches, in an effort to further
public debate. “Congress and the President need to address this
situation shortly after the 2004 election if they are to enact a
new system in time for the presidential season of 2007-2008,” the
Task Force report said. “For that to happen, the time to begin
working is now.”

Double the spending limit for participating candidates to
the same amount as the general election, which is currently
$75 million.

Permit a participating candidate to spend as much as the
highest nonparticipating opponent in his or her own party.

Allow parties to spend an additional $15 million in
coordination with their candidates, to support competition
between the primaries and convention;

Three-for-one Matching Funds:

Change the public match of private funds to 3-for-1 for the
first $100 of each individual contribution (instead of the
current 1-for-1 for the first $250) to bolster the incentives
for politicians to pay attention to these donors and for the
donors to feel their participation will make a difference.

- With this recommendation, small donors – instead of
having large donors outgun them by 333% – would be worth
almost as much as the $1000-plus donors under the
Bipartisan Campaign Reform Act.

- “This would be a very big change,” the Task Force said,
but “is not a far-fetched scenario. It can be done and
it should be done. What is more, it can be done at a
very reasonable cost.”

Replenish the Public Fund:

Increase the voluntary checkoff on income tax returns from $3
to $5 for individuals (and $6 to $10 for joint filers).

- The estimated $122.6 million generated would be more than
enough to pay for all of the Task Force’s recommendations.

Institute new educational and other programs aimed at tax
preparation services and software providers, as well as at
taxpayers.

Other Issues:

Minor Parties – Allow minor party and independent candidates
to establish separate, fully disclosed ballot access funds –
based on individual contributions not subject to contribution
limits. A candidate achieving ballot access in states with a
majority of electoral votes should be eligible for matching
public funds during the general election.

Conventions – Require party convention expenses to be paid
not with corporate and other soft money but with the existing
federal grant, other state and local government sources, and
“hard money” raised by the national party within federal
contribution limits. Law enforcement and security needs in
anage of terrorism should be supported by grants from the
Department of Homeland Security. Civic host committees should
continue to be able to use corporate and other private
contributions for non-convention expenses, such as promoting
the city as a convention site and facilitating commerce during
the convention.

Tax credits – The Task Force also considered and presented new
research about the potential effects of an income-limited 100%
tax credit for small contributions to candidates participating
in public funding. While not recommending this option now,
its research is intended to place it on the table for future
consideration.

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The Campaign Finance Institute is a non-partisan, non-profit institute
affiliated with the George Washington University that conducts
objective research and education, empanels task forces and makes
recommendations for policy change in the field of campaign finance. It
is supported by generous grants from the Joyce Foundation, Smith
Richardson Foundation and The Pew Charitable Trusts. For further
information, visit the CFI web site at www.CFInst.org.